The US stock market rallied last week as investors remained bullish after the hurricane Irma’s effect on Florida was better than expected. Even though Irma hit hard some parts of Florida, mainly the Florida Keys and Marco Islands, other regions were flooded less as the hurricane turned inland and actually pulled water away from the shoreline. Nevertheless, Irma still was one of the costliest hurricanes for the US, with damages currently estimated between $50 and $100 billion. With the impact of hurricane Harvey that rolled through Texas a week earlier, the Atlanta Fed tracker slashed its estimate for third-quarter GDP growth to 2.2% from the previous 3% projected a week earlier. Goldman Sachs also updated its third-quarter GDP growth forecast after the two hurricanes to 1.6%, down from the previous 2%.
The hurricane Harvey also showed to have an impact on the US retail sales (although it’s unclear by how much). US retail sales in August declined by 0.2% on the month, on the back of drops registered in sales of automobiles, electronics and clothing, although a part of it is considered due to the impact of hurricane Harvey that affected many high population cities in Texas. It also affected the Industrial production, which inched down by 0.9% in August, as oil, gas, and chemical plants along the Gulf Coast were affected. However, in some instances, the negative effect of the hurricanes should benefit certain industries. The shut-down of refineries pushed gas prices higher and trucking companies expect to enjoy higher demand due to rebuilding efforts. Some chemical companies should enjoy higher prices for their products as Harvey disrupted around a third of the US chemical production.
In this way, with Irma causing fewer than expected damages and the growth registered by industries that are expected to benefit having offset the declines of insurance companies, the S&P 500 and the Dow Jones Industrial Averages ended last week with gains of 1.60% and 0.64%, respectively.
TrackStar, the official newsletter of Investing Channel’s Intuition, has looked at the search data to identify the tickers that financial advisors looked for between September 10 and September 16. Among the changes in the list were the move of AT&T, Inc. (NYSE:T) down to the second spot, after having leading the list of the 20 most searched tickers for the previous three weeks. Apple Inc. (NASDAQ:AAPL) moved to the top spot in connection with its September 12 event, where it presented new products. The talk about the hurricanes didn’t bypass financial advisors either, as the list showed construction equipment manufacturer Caterpillar Inc. (NYSE:CAT) on the fourth spot and home improvement stores operator Lowe’s Companies, Inc. (NYSE:LOW) on the 17th position.
Let’s take a closer look at Apple Inc (NASDAQ:AAPL) and the latest products that the company announced last week. The September 12 event was preceded by a lot of hype. The company was about to give its first presentation at the Steve Jobs Theater inside its new Cupertino headquarters and it was the 10th anniversary of the iPhone. However, due to the previous leaks, the expectations about the products’ features were somewhat diminished. Nevertheless, on September 11 and 12, Apple Inc (NASDAQ:AAPL)’s stock gained over 1.40%, but sold off in the following days, ending the week with a modest appreciation of 0.80%.
As predicted, Apple Inc (NASDAQ:AAPL) released its new iPhone model, the iPhone 8 and the larger 8 Plus version. The model is just a new generation of the iPhone 7, which in turn was a new generation of the iPhone 6. Even though, at the event, it was said that the iPhone 8 features an “all-new design” it’s still pretty basic and very similar to the old models, with the exception of the glass back. The iPhone 8 also features the True Tone display technology, which adjusts the color temperature on the go through sensors that measure the ambient light. The phone also got the new A11 Bionic processor, new speakers, an upgraded Bluetooth 5.0, a better camera, and the glass back allows it to charge wirelessly using the Qi technology. Aside from the new iPhone 8, Apple Inc (NASDAQ:AAPL) also presented the third series of its Apple Watch, which, as expected, featured integrated cellular connectivity.
However, what was the most anticipated product, was its celebratory iPhone X (pronounced “ten”, but people are going to call it “eks” because it sounds cooler). Even though it doesn’t show much on the innovation side, it’s a huge leap from the other iPhones. The device’s design received lots of praise in the media, with descriptions like “beautiful” and “pleasant to hold in your hand”. The iPhone X has a 5.8-inch OLED display, slightly bigger than the current large iPhones and it doesn’t have a home button, so the screen covers almost the entire surface of the phone. To address the lack of the home button, Apple has added some features to allow unlocking the phone, since the home button on traditional iPhones doubles as a fingerprint sensor. The phone has something that Apple called “Face ID” which uses the front-facing TrueDepth camera system to scan the face of the owner and unlock the phone by identifying him. What’s also impressive about the iPhone X is the price, which starts at $999, but apparently it’s not going to stop millions of Apple fans to buying it.
Now, while consumers were certainly excited about the new iPhones, investors and analysts have had mixed feelings so far. One of the first issues that arise for Apple Inc (NASDAQ:AAPL) as a company is self-cannibalization. The iPhone has long transitioned from being just a smartphone to more of a status symbol, especially with the release of many Android-based smartphones that have similar functions and features, but come at a fraction of a cost. With this being said, it’s expected that many consumers will withhold buying the iPhone 8 and move directly to the iPhone X. In a report, KGI Securities stated that the shipping times for the iPhone 8 are shorter than they were for 7, which signals lower demand.
The other issue is that Apple Inc (NASDAQ:AAPL) has delayed the launch of the iPhone X to November 3 and it has been reported that the company is facing some supply issues, which could result in shipping delays that could stretch into the first half of 2018. On the one hand, this will affect Apple’s financial results for the fiscal 2018 first quarter, while the fiscal 2017 fourth-quarter results might be affected by lower iPhone 8 sales. It might also affect the consumer sentiment, because if someone wants to buy an iPhone X during the holidays, or was even expecting to be able to buy it in September, but instead has to wait until the next year, it’s likely that person will choose to buy another device instead. KGI Securities currently expect Apple to be able to build 40 million iPhone X handsets before the end of the year and to deliver between 80 and 90 million devices in 2018.
However, in their majority, analysts are optimistic about Apple Inc (NASDAQ:AAPL)’s results and are not concerned about the delays, expecting them to not affect the overall sales figures, which will be carried into the following quarters.